With Christmas and New Year celebrations behind us, many of firms will be looking to the year ahead and how they can ensure they are ready for the go-live date for Consumer Duty at the end of July.
During our recent webinar and FAQ panel session (click here to access), we advised that firms should expect the FCA to ask for copies of their implementation plans and gap analysis documents. This will enable the FCA to get a better picture of the challenges that firms are facing in trying to implement the Consumer Duty and whether they will meet the implementation deadline of 31 July 2023. As suspected, over the last month we have been hearing reports that the FCA has indeed been contacting firms by phone asking them about the content of their implementation plans and approach to Consumer Duty.
The October 31 2022 deadline for implementation plans was a challenge, but most firms met it. However, in light of news that the FCA has been contacting firms regarding the content of their implementation, firms should ensure that their Consumer Duty Implementation Plan has been scrutinised, challenged, and signed off by the Board or management body. Firms should also have completed, or be in the process of completing, a gap analysis to identify the extent to which current practices meet Consumer Duty requirements and where changes need to be made.
Looking forward to the Consumer Duty go-live date, there are a number of tasks that will need to be completed.
- Manufacturers are required to review their products and services by 30th April 2023 and identify where changes need to be made to open products and services and implement any necessary changes by the end of July 2023.
- Manufacturers should also share information about products and services with distributors so that they, in turn, can meet their obligations under the new Duty. For example, distributors will need to understand and be able to discuss with customers, what the benefits and limitations of products are or whether there are any additional charges that could be applied later in the product lifecycle which might adversely impact the value of the product for the customer. It can be argued that the engagement and sharing of information between manufacturers and distributors is not as effective as it could be. Distributors have not always given feedback to manufacturers on product issues or been asked for it. This will require a new way of thinking for many manufacturers and distributors.
- Firms’ boards or management bodies will need to assure themselves and also attest that they are complying with their obligations under the Duty by 31 July 2023. As part of this exercise, they will need to make sure they have identified any potential gaps or weaknesses in compliance with the Duty and have agreed the actions that are needed to address them.
- While the Consumer Duty is effective from 31st July 2023 for open products and services, firms should consider whether they have any closed products, as they will need to be reviewed and any necessary changes made by 31st July 2024 to make sure they comply with Consumer Duty.
The FCA has been very clear that any firms who do not meet the Consumer Duty deadlines will risk enforcement action. If firms feel they will not meet their deadlines, they must tell the FCA as soon as possible. Please do get in touch with us if you need help implementing Consumer Duty. We can help you complete your gap analysis, provide advice and guidance and we have a number of Consumer Duty related templates which you may find useful.
Looking for training, why not take a look at our new CPD accredited Consumer Duty course? View our online training page here.